Company Quick10K Filing
Quick10K
Aldeyra Therapeutics
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$8.03 27 $221
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
8-K 2019-08-08 Earnings, Other Events, Exhibits
8-K 2019-06-25 Regulation FD, Other Events, Exhibits
8-K 2019-06-04 Shareholder Vote, Regulation FD, Exhibits
8-K 2019-05-09 Earnings, Exhibits
8-K 2019-03-25 Enter Agreement, Off-BS Arrangement, Regulation FD, Other Events, Exhibits
8-K 2019-03-08 Earnings, Exhibits
8-K 2019-02-28 Regulation FD, Other Events, Exhibits
8-K 2019-01-24 Enter Agreement, M&A, Sale of Shares, Other Events, Exhibits
8-K 2018-12-28 Enter Agreement, Exhibits
8-K 2018-11-20 Leave Agreement
8-K 2018-11-14 Earnings, Exhibits
8-K 2018-09-26 Enter Agreement, Other Events, Exhibits
8-K 2018-09-26 Regulation FD, Other Events, Exhibits
8-K 2018-09-25 Other Events, Exhibits
8-K 2018-08-09 Earnings, Exhibits
8-K 2018-07-27 Officers, Exhibits
8-K 2018-06-26 Regulation FD, Other Events, Exhibits
8-K 2018-06-07 Shareholder Vote
8-K 2018-02-27 Other Events, Exhibits
CCI Crown Castle 51,560
SQ Square 28,080
QSR Restaurant Brands International 17,010
DOCU Docusign 9,270
GMLP Golar Lng Partners 820
HIIQ Health Insurance Innovations 295
SBFG SB Financial Group 118
IROQ IF Bancorp 71
AAC AgapeATP 48
HMMR Hammer Fiber Optics Holdings 0
ALDX 2019-06-30
Part I - Financial Information
Item 1. Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-31.1 aldx-ex311_6.htm
EX-31.2 aldx-ex312_7.htm
EX-32.1 aldx-ex321_8.htm

Aldeyra Therapeutics Earnings 2019-06-30

ALDX 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 aldx-10q_20190630.htm 10-Q aldx-10q_20190630.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                      

Commission File Number: 001-36332

 

ALDEYRA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

20-1968197

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

131 Hartwell Avenue, Suite 320

 

 

Lexington, MA

 

02421

(Address of principal executive offices)

 

(Zip Code)

 

(781) 761-4904

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer a smaller reporting company or an emerging growth company. See the definitions of the “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

  

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

Securities registered pursuant to 12(b) of the Act:

 

Title of Class

Trading Symbol

Name of exchange on which registered

Common Stock, $0.001 par value per share

ALDX

The Nasdaq Stock Market LLC

 

As of August 9, 2019, there were 27,578,247 shares of the registrant’s common stock issued and outstanding.

 


 

 

Aldeyra Therapeutics, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended June 30, 2019

INDEX

 

 

Page

PART I – FINANCIAL INFORMATION

ITEM 1.

Condensed Consolidated Financial Statements:

3

 

Consolidated Balance Sheets at June 30, 2019 (Unaudited) and December 31, 2018

3

 

Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018 (Unaudited)

4

 

Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2019 and 2018 (Unaudited)

5

 

Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2019 and 2018 (Unaudited)

6

 

Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018 (Unaudited)

8

 

Notes to Condensed Consolidated Financial Statements

9

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

24

ITEM 4.

Controls and Procedures

24

PART II – OTHER INFORMATION

 

ITEM 1.

Legal Proceedings

25

ITEM 1A.

Risk Factors

25

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

56

ITEM 3.

Defaults Upon Senior Securities

56

ITEM 4.

Mine Safety Disclosures

56

ITEM 5.

Other Information

56

ITEM 6.

Exhibits

56

Signatures

57

 

2


 

Part I – FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

June 30,

 

 

 

 

 

 

 

2019

 

 

December 31,

 

 

 

(unaudited)

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,399,564

 

 

$

3,357,472

 

Cash equivalent - Reverse Repurchase Agreements

 

 

32,000,000

 

 

 

44,000,000

 

Marketable securities

 

 

30,057,408

 

 

 

46,242,220

 

Prepaid expenses and other current assets

 

 

3,398,930

 

 

 

1,169,594

 

Total current assets

 

 

72,855,902

 

 

 

94,769,286

 

Deferred offering costs

 

 

 

 

 

86,644

 

Debt issuance costs

 

 

492,448

 

 

 

 

Right-of-use assets

 

 

294,173

 

 

 

 

Fixed assets, net

 

 

196,491

 

 

 

235,225

 

Total assets

 

$

73,839,014

 

 

$

95,091,155

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,773,987

 

 

$

3,051,678

 

Accrued expenses

 

 

3,403,789

 

 

 

5,421,498

 

Current portion of operating lease liabilities

 

 

211,744

 

 

 

 

Total current liabilities

 

 

6,389,520

 

 

 

8,473,176

 

Operating lease liabilities, long-term

 

 

116,124

 

 

 

 

Total liabilities

 

 

6,505,644

 

 

 

8,473,176

 

Commitments and contingencies (Notes 14 and 15)

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value, 15,000,000 shares authorized, none issued and

   outstanding

 

 

 

 

 

 

Common stock, voting, $0.001 par value; 150,000,000 authorized and 26,986,936

   and 26,244,435 shares issued and outstanding, respectively

 

 

26,987

 

 

 

26,244

 

Additional paid-in capital

 

 

234,779,291

 

 

 

225,136,127

 

Accumulated other comprehensive income (loss)

 

 

13,453

 

 

 

(9,224

)

Accumulated deficit

 

 

(167,486,361

)

 

 

(138,535,168

)

Total stockholders’ equity

 

 

67,333,370

 

 

 

86,617,979

 

Total liabilities and stockholders’ equity

 

$

73,839,014

 

 

$

95,091,155

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

10,664,858

 

 

$

6,792,974

 

 

$

18,513,448

 

 

$

13,393,080

 

Acquired in-process research and development

 

 

(49,848

)

 

 

 

 

 

6,547,703

 

 

 

 

General and administrative

 

 

3,116,414

 

 

 

2,373,059

 

 

 

6,101,452

 

 

 

4,264,360

 

Loss from operations

 

 

(13,731,424

)

 

 

(9,166,033

)

 

 

(31,162,603

)

 

 

(17,657,440

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

432,908

 

 

 

141,956

 

 

 

932,049

 

 

 

264,346

 

Interest expense

 

 

(28,649

)

 

 

(26,358

)

 

 

(30,612

)

 

 

(54,402

)

Total other income (expense), net

 

 

404,259

 

 

 

115,598

 

 

 

901,437

 

 

 

209,944

 

Loss before income taxes

 

 

(13,327,165

)

 

 

(9,050,435

)

 

 

(30,261,166

)

 

 

(17,447,496

)

Income tax benefit

 

 

 

 

 

 

 

 

1,309,973

 

 

 

 

Net loss

 

$

(13,327,165

)

 

$

(9,050,435

)

 

$

(28,951,193

)

 

$

(17,447,496

)

Net loss per share - basic and diluted

 

$

(0.49

)

 

$

(0.46

)

 

$

(1.08

)

 

$

(0.88

)

Weighted average common shares outstanding - basic and

   diluted

 

 

26,985,454

 

 

 

19,761,352

 

 

 

26,836,292

 

 

 

19,761,352

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

4


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net loss

$

(13,327,165

)

 

$

(9,050,435

)

 

$

(28,951,193

)

 

$

(17,447,496

)

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on marketable securities

 

6,641

 

 

 

13,826

 

 

 

22,677

 

 

 

15,272

 

Total other comprehensive income

$

6,641

 

 

$

13,826

 

 

$

22,677

 

 

$

15,272

 

Comprehensive loss

$

(13,320,524

)

 

$

(9,036,609

)

 

$

(28,928,516

)

 

$

(17,432,224

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 


5


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

 

 

 

Stockholders' Equity

 

 

 

Common Voting Stock

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional

Paid-in Capital

 

 

Other

Comprehensive

Income/(Loss),

net of tax

 

 

Accumulated

Deficit

 

 

Total

Stockholders'

Equity

 

Balance, December 31, 2018

 

 

26,244,435

 

 

$

26,244

 

 

$

225,136,127

 

 

$

(9,224

)

 

$

(138,535,168

)

 

$

86,617,979

 

Stock-based compensation

 

 

 

 

 

 

 

 

3,981,052

 

 

 

 

 

 

 

 

 

3,981,052

 

Issuance of common stock in connection

   with Helio Vision, Inc. acquisition

 

 

582,363

 

 

 

582

 

 

 

4,862,149

 

 

 

 

 

 

 

 

 

4,862,731

 

Issuance of common stock, net of

   issuance costs

 

 

83,557

 

 

 

84

 

 

 

720,879

 

 

 

 

 

 

 

 

 

720,963

 

Issuance of common stock, employee

   stock purchase plan

 

 

11,569

 

 

 

12

 

 

 

79,149

 

 

 

 

 

 

 

 

 

 

 

79,161

 

Issuance of common stock for vested

   restricted stock units

 

 

65,012

 

 

 

65

 

 

 

(65

)

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

22,677

 

 

 

 

 

 

22,677

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(28,951,193

)

 

 

(28,951,193

)

Balance, June 30, 2019

 

 

26,986,936

 

 

$

26,987

 

 

$

234,779,291

 

 

$

13,453

 

 

$

(167,486,361

)

 

$

67,333,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2017

 

 

19,137,639

 

 

 

19,138

 

 

 

139,241,635

 

 

 

(17,831

)

 

 

(99,641,923

)

 

 

39,601,019

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,853,199

 

 

 

 

 

 

 

 

 

1,853,199

 

Issuance of common stock, net of

   issuance costs

 

 

1,663,584

 

 

 

1,663

 

 

 

12,956,940

 

 

 

 

 

 

 

 

 

12,958,603

 

Issuance of common stock for vested

   restricted stock units

 

 

40,975

 

 

 

41

 

 

 

(41

)

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

15,272

 

 

 

 

 

 

15,272

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,447,496

)

 

 

(17,447,496

)

Balance, June 30, 2018

 

 

20,842,198

 

 

$

20,842

 

 

$

154,051,733

 

 

$

(2,559

)

 

$

(117,089,419

)

 

$

36,980,597

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6


 

ALDEYRA THERAPEUTICS, INC.

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

 

 

 

Stockholders' Equity

 

 

 

Common Voting Stock

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional

Paid-in Capital

 

 

Other

Comprehensive

Income/(Loss),

net of tax

 

 

Accumulated

Deficit

 

 

Total

Stockholders'

Equity

 

Balance, March 31, 2019

 

 

26,910,355

 

 

$

26,910

 

 

$

232,605,244

 

 

$

6,812

 

 

$

(154,159,196

)

 

$

78,479,770

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,094,963

 

 

 

 

 

 

 

 

 

2,094,963

 

Issuance of common stock, employee

   stock purchase plan

 

 

11,569

 

 

 

12

 

 

 

79,149

 

 

 

 

 

 

 

 

 

 

 

79,161

 

Issuance of common stock for vested

   restricted stock units

 

 

65,012

 

 

 

65

 

 

 

(65

)

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

6,641

 

 

 

 

 

 

6,641

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,327,165

)

 

 

(13,327,165

)

Balance, June 30, 2019

 

 

26,986,936

 

 

$

26,987

 

 

$

234,779,291

 

 

$

13,453

 

 

$

(167,486,361

)

 

$

67,333,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2018

 

 

19,664,921

 

 

$

19,665

 

 

$

144,036,909

 

 

$

(16,385

)

 

$

(108,038,986

)

 

$

36,001,203

 

Stock-based compensation

 

 

 

 

 

 

 

 

984,784

 

 

 

 

 

 

 

 

 

984,784

 

Issuance of common stock, net of

   issuance costs

 

 

1,136,302

 

 

 

1,136

 

 

 

9,030,081

 

 

 

 

 

 

 

 

 

9,031,217

 

Issuance of common stock for vested

   restricted stock units

 

 

40,975

 

 

 

41

 

 

 

(41

)

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

13,826

 

 

 

 

 

 

13,826

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,050,433

)

 

 

(9,050,433

)

Balance, June 30, 2018

 

 

20,842,198

 

 

$

20,842

 

 

$

154,051,733

 

 

$

(2,559

)

 

$

(117,089,419

)

 

$

36,980,597

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(28,951,193

)

 

$

(17,447,496

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Acquired in-process research and development

 

 

6,547,703

 

 

 

 

Deferred taxes

 

 

(1,309,973

)

 

 

 

Stock-based compensation

 

 

3,981,052

 

 

 

1,853,199

 

Amortization of debt discount – non-cash interest expense

 

 

30,738

 

 

 

7,738

 

Net amortization of premium on debt securities available for sale

 

 

(341,758

)

 

 

7,163

 

Depreciation

 

 

48,263

 

 

 

29,282

 

Change in assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(2,138,104

)

 

 

(373,938

)

Accounts payable

 

 

(956,174

)

 

 

(198,838

)

Accrued expenses

 

 

(2,353,411

)

 

 

1,922,606

 

Net cash used in operating activities

 

$

(25,442,857

)

 

 

(14,200,284

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Acquisitions of property and equipment

 

 

(9,529

)

 

 

(200,763

)

Cash acquired in Helio asset acquisition

 

 

562,362

 

 

 

 

Purchases of marketable securities

 

 

(21,466,353

)

 

 

(12,091,149

)

Sales of marketable securities

 

 

38,000,000

 

 

 

17,950,000

 

Net cash provided by investing activities

 

 

17,086,480

 

 

 

5,658,088

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock, net of issuance costs

 

 

720,964

 

 

 

13,124,533

 

Proceeds from employee stock purchase plan

 

 

79,161

 

 

 

 

Debt issuance costs paid in cash

 

 

(401,656

)

 

 

 

Net cash provided by financing activities

 

 

398,469

 

 

 

13,124,533

 

NET (DECREASE)/INCREASE IN CASH

 

 

(7,957,908

)

 

 

4,582,337

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

47,357,472

 

 

 

20,023,337

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

39,399,564

 

 

$

24,605,674

 

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING

   ACTIVITIES:

 

 

 

 

 

 

 

 

Helio acquisition:

 

 

 

 

 

 

 

 

Assets acquired

 

$

75,632

 

 

$

 

Liabilities acquired

 

$

637,994

 

 

$

 

Fair value of securities issued

 

$

4,862,731

 

 

$

 

Debt issuance costs not yet paid

 

$

121,530

 

 

$

 

Right-of-use assets acquired through operating leases

 

$

386,060

 

 

$

 

Cash paid during the period for interest

 

$

 

 

$

46,877

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

8


 

ALDEYRA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.

NATURE OF BUSINESS

Aldeyra Therapeutics, Inc., together with its wholly-owned subsidiaries (the Company or Aldeyra), a Delaware corporation, is developing next-generation medicines to improve the lives of patients with immune-mediated diseases.

The Company’s principal activities to date include raising capital and research and development activities.

2.

BASIS OF PRESENTATION

The accompanying interim unaudited condensed consolidated financial statements and related disclosures are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s financial statements and related notes for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the Securities and Exchange Commission on March 8, 2019. The financial information as of June 30, 2019, and the three and six months ended June 30, 2019 and 2018 is unaudited, but in the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of the financial position, results of operations and cash flows at the dates and for the periods presented of the results of these interim periods have been included. The balance sheet data as of December 31, 2018 was derived from audited financial statements. The results of the Company’s operations for any interim period are not necessarily indicative of the results that may be expected for any other interim period or for a full fiscal year.

Based on its current operating plan, and not including access to capital under the Company’s credit facility or the Open Market Sales Agreement SM (Jefferies Sales Agreement), the Company believes that its cash, cash equivalents, and marketable securities as of June 30, 2019, will be adequate to fund currently anticipated operating expenses through the end of 2020, including the currently planned Phase 3 clinical trial in dry eye disease (the RENEW trial) and the initial part of the currently planned adaptive Phase 3 clinical trial in proliferative vitreoretinopathy (the GUARD trial).  The Company will need to secure additional funding in the future, from one or more equity or debt financings, collaborations, or other sources, in order to carry out all planned research and development activities; commercialize product candidates; or conduct any substantial, additional development requirements requested by the FDA. Additional funding may not be available to the Company on acceptable terms, or at all. If the Company is unable to secure additional capital, it will be required to significantly decrease the amount of planned expenditures and may be required to cease operations.

Curtailment of operations would cause significant delays in the Company’s efforts to develop and introduce its products to market, which is critical to the realization of its business plan and the future operations of the Company.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, including fair value estimates for investments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The Company evaluates its estimates and assumptions on an ongoing basis. The most significant estimates in the Company’s financial statements relate to accruals, including research and development costs, acquired in-process research and development expense, accounting for income taxes and related valuation allowance and accounting for stock-based compensation and related fair value assessments. Although estimates and assumptions are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.

In-process research and development

Assets purchased in an asset acquisition transaction are expensed as in-process research and development unless the assets acquired are deemed to have an alternative future use, provided that the acquired asset did not also include processes or activities that would constitute a “business” as defined under GAAP, the drug has not achieved regulatory approval for marketing and, absent obtaining such approval, has no established alternative future use. Acquired in-process research and development payments are immediately expensed in the period in which they are incurred and include upfront payments, as well as transaction fees and subsequent pre-commercial milestone payments. Research and development costs incurred after the acquisition are expensed as incurred.

9


 

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02 (ASU 2016-02), Leases. ASU 2016-02 requires lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. The Company adopted the provisions of ASU 2016-02 as of January 1, 2019, and the provisions did not have a material impact on the Company’s financial statements.

3.

Helio Vision Acquisition

On January 28, 2019 (the closing date), the Company acquired Helio Vision, Inc. (Helio).  As a result of the acquisition, the Company initially issued an aggregate of 1,150,990 shares of common stock to the former securityholders and an advisor of Helio. The founders of Helio were issued 568,627 shares and non-founders were issued 582,363 shares.  The Helio founders’ shares are subject to vesting based on continued service to the Company over three years from the closing date.  The Company will recognize the expense associated with the founders’ restricted shares as compensation expense on a straight-line basis as the shares vest over the three-year period.  For the three and six months ended June 30, 2019, the Company recorded $0.6 million and $1.0 million, respectively, of research and development expense for the founders’ restricted shares.  The Company, subject to the conditions of the acquisition agreement, will be obligated to make additional payments to the former securityholders of Helio as follows: (a) $2.5 million of common stock on the date that is 24 months following the closing date (assuming certain technical milestones are met); (b) $10.0 million of common stock following approval by the FDA of a new drug approval application for the prevention and/or treatment of proliferative vitreoretinopathy or a substantially similar label prior to the 10th anniversary of the closing date; and (c) $2.5 million of common stock following FDA approval of a new drug application for an indication (other than proliferative vitreoretinopathy) prior to the 12th anniversary of the closing date (the shares of common stock issuable pursuant to the preceding clauses (a) – (c) are referred to herein as the Milestone Shares), provided that in no event shall the Company be obligated to issue more than an aggregate of 5,248,885 shares of common stock. Additionally, in the event of certain change of control or divestitures by the Company, certain former convertible noteholders of Helio will be entitled to a tax gross-up payment in an amount not to exceed $1.0 million.

The Company determined that liability accounting is not required for the Milestone Shares under FASB ASC (Accounting Standards Council) Topic 480, Distinguishing Liabilities from Equity (“ASC 480”). The Company then determined that the Milestone Shares meet the scope exception from derivative under FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”), from inception of the Milestone Shares through June 30, 2019.  Accordingly, the Milestone Shares are evaluated under FASB ASC Topic 450, Contingencies (ASC 450) and the Company will record a liability related to the Milestone Shares if and when the milestones are achieved, and the consideration becomes probable. At that time, the Company will record the cost of the Milestone Shares issued to the founders as compensation expense and to the Helio non-founders as in-process research and development expense if there is no alternative future use. No milestones related to the Milestone Shares are probable of being achieved as of June 30, 2019.

 

The Company assessed the acquisition of Helio under the FASB ASC Topic 805, Business Combinations (ASC 805). Under ASC 805, the Company determined that the acquired assets did not constitute a business since substantially all of the assets acquired were related to ADX-2191 and that the transaction would be accounted for as an asset acquisition. The asset and development program acquired from Helio are at an early stage of development and will require a significant investment of time and capital for development. There is no assurance that the Company will be successful in developing such asset, and a failure to successfully develop such asset could diminish the Company’s prospects. Under ASC 805, the asset acquired is considered to have no alternative future uses, since the future economic benefit of the acquired asset at the date of acquisition is highly uncertain. The fair value of the assets was determined using the quoted market price of the Company’s common stock on the closing date and was fully expensed as in-process research and development.  Additionally, the Company assessed the Helio acquisition under ASC Topic 740, Income Taxes (ASC 740). The acquisition resulted in an income tax benefit of $1.3 million and a corresponding increase to acquired in-process research and development expense. The expense resulted from the reduction in the Company’s valuation allowance due to the deferred tax liability created as a result of the book and tax basis difference during the quarter ended March 31, 2019. During the quarter ended March 31, 2019, the Company recorded $6.6 million in in-process research and development expense related to the fair value of consideration given which includes transaction costs and the deferred tax impact of the Helio acquisition.

10


 

4.

NET LOSS PER SHARE

As of June 30, 2019 and 2018, diluted weighted average common shares outstanding is equal to basic weighted average common shares due to the Company’s net loss position.

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding, because such securities had an antidilutive impact:

 

 

 

Three and Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Options to purchase common stock

 

 

4,817,497

 

 

 

3,402,163

 

Warrants to purchase common stock

 

 

 

 

 

60,000

 

Restricted stock units

 

 

430,425

 

 

 

212,297

 

Unvested restricted shares

 

 

568,627

 

 

 

 

Total of common stock equivalents

 

 

5,816,549

 

 

 

3,674,460

 

 

5.

CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

Cash, cash equivalents, and marketable securities were comprised of:

 

 

 

June 30, 2019

 

 

 

Carrying

Amount

 

 

Unrecognized

Gain

 

 

Unrecognized

Loss

 

 

Estimated

Fair Value

 

 

Cash

Equivalents

 

 

Current

Marketable

Securities

 

Cash

 

$

1,963,104

 

 

$

 

 

$

 

 

$

1,963,104

 

 

$

1,963,104

 

 

$

 

Money market funds

 

 

3,438,880

 

 

 

 

 

 

 

 

 

3,438,880

 

 

 

3,438,880

 

 

 

 

Reverse repurchase agreements

 

 

32,000,000

 

 

 

 

 

 

 

 

 

32,000,000

 

 

 

32,000,000

 

 

 

 

U.S. government agency securities

 

 

32,041,535

 

 

 

13,453

 

 

 

 

 

 

 

32,054,988

 

 

 

1,997,580

 

 

 

30,057,408

 

Available for Sale(1)

 

 

64,041,535

 

 

 

13,453

 

 

 

 

 

 

64,054,988

 

 

 

33,997,580

 

 

 

30,057,408

 

Total cash, cash equivalents, and

   current marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

39,399,564

 

 

$

30,057,408

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

 

 

Carrying

Amount

 

 

Unrecognized

Gain

 

 

Unrecognized

Loss

 

 

Estimated

Fair Value

 

 

Cash and Cash

Equivalents

 

 

Current

Marketable

Securities

 

Cash

 

$

2,127,175

 

 

$

 

 

$

 

 

$

2,127,175

 

 

$

2,127,175

 

 

$

 

Money market funds

 

 

1,230,297

 

 

 

 

 

 

 

 

 

1,230,297

 

 

 

1,230,297

 

 

 

 

Reverse repurchase agreements

 

 

44,000,000

 

 

 

 

 

 

 

 

 

44,000,000

 

 

 

44,000,000

 

 

 

 

U.S. government agency securities

 

 

46,251,444

 

 

 

 

 

 

(9,224

)

 

 

46,242,220

 

 

 

 

 

 

46,242,220

 

Available for Sale(1)

 

 

90,251,444

 

 

 

 

 

 

(9,224

)

 

 

90,242,220

 

 

 

44,000,000

 

 

 

46,242,220

 

Total Cash, cash equivalents and

   current marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

47,357,472

 

 

$

46,242,220

 

 

(1)

Available for sale securities are reported at fair value with unrealized gains and losses reported net of taxes, if material, in other comprehensive income.

The contractual maturities of all available for sale securities were less than one year at June 30, 2019.

6.

FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value are performed in a manner to maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820, Fair Value Measurements, establishes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:

Level 1 – Quoted prices in active markets that are accessible at the market date for identical unrestricted assets or liabilities.

11